2017 ANNUAL REPORT

2017 growth drivers

SAS’ investment in risk management is paying off, as new sales in this area grew by 35 percent – an indicator that more companies see value in creating a risk-aware culture to meet regulatory demands and anticipate the impact of their investments. SAS expected credit loss and stress testing solutions go beyond compliance to help companies orchestrate and manage models and analytics for business benefit.

An uptick in SAS capital management risk solutions was driven by continued banking regulatory stress testing requirements and new financial reporting standards like IFRS 9 and CECL. An increased need to make real-time credit decisions boosted revenue for SAS credit scoring solutions.

The advanced data governance and data quality capabilities offered by SAS Data Management, which grew at 11 percent, became increasingly important for customers to contend with data protection regulations like GDPR. Hybrid data landscapes, which combine on-premises and cloud data, also required more sophisticated data integration technologies last year.

Shifts in fraud patterns that require more sophisticated detection methods, like machine learning, led to an 11 percent increase in SAS fraud and security solutions. Modernization of anti-money laundering programs and a need for proactive policing also contributed to this growth.

SAS enhanced the artificial intelligence portfolio with new product releases in machine learning, deep learning and natural language processing, enabling faster insights and simplifying the end-to-end solution for businesses. This focus to make machine learning easy to use and provide quick time to value was well received by SAS customers, and contributed to double-digit growth in machine learning last year.

2018 focus areas

In 2018 SAS is focused on investment areas supporting continued growth in critical and emerging areas. This includes targeted investments to accelerate growth in core strengths, including artificial intelligence and machine learning, analytics, fraud, risk management, data management and customer intelligence. In addition, there is incredible growth opportunity for SAS in IoT, cloud and expansions into the midmarket.

Last year alone, SAS revenue associated with IoT grew by 60 percent. Industry analyst firm IDC estimates the size of the analytics market in IoT will grow to over $23 billion by 2020. An estimated 55 billion connected things are projected to be generating massive data volumes by 2025. Capitalizing on this opportunity will require innovation, like SAS Event Stream Processing, which gained tremendous traction in 2017. And SAS has created an IoT division combining R&D and marketing expertise that continues SAS’ focus on providing edge analytics that adds great value to customers’ IoT investments. SAS will continue expanding its Fraud and Security Intelligence business unit, which includes fraud management, anti-money laundering, public safety and cybersecurity.

SAS will continue heavy investment in embedding artificial intelligence across the SAS portfolio. Plans are also underway for a center of excellence to help SAS customers understand and apply artificial intelligence in ways that can transform their businesses and the world around us. For example, in financial services, AI-enabled natural language processing can help unlock new services for customers and revenue streams for businesses. In the energy sector, deep learning tools enabled by artificial intelligence can help maximize investments in renewable energy by optimizing placement of wind farms.

New offerings to enhance the cloud experience with SAS applications will include managed container services for customer infrastructure in public or private clouds.

Continuous innovation sustains market leadership

Analysts continue to laud the company’s innovation and market dominance, naming SAS a leader in predictive and advanced analytics. According to analysts, SAS holds a 30.5 percent share of the advanced and predictive analytics market, well over twice the market share of the next-closest competitor. SAS has led – and grown – in this category since IDC started tracking the market in 1997. In 2017, analysts also named SAS a leader in streaming analytics, machine learning, big data, data science platforms, real-time marketing, data integration, data quality, fraud detection, risk management and retail analytics.

Maintaining market leadership is heavily dependent upon innovation. Year after year, SAS reinvests about twice the amount of revenue of major technology firms into R&D – 26 percent in 2017. This investment supported the addition of artificial intelligence capabilities to the SAS Platform. And enhancements to SAS Viya extend the SAS Platform to deliver additional capabilities for analytics-driven organizations, including Cisco, the American Red Cross, Munich Re and Lockheed Martin. This modernization appeals to a growing number of SAS Viya adopters seeking to bring together all their analytics assets, and unite SAS with open source interfaces and languages.

Powerful partner ecosystem

SAS global partnering efforts influenced more than one-third of new sales and nearly half of SAS’ largest deals. This includes a growing demand for cloud solutions by midmarket customers with a desire to purchase through trusted local partners. With an increasing focus on channel sales, SAS grew channel revenue by 79 percent in 2017.

The partner impact result is a channel program of systems integrators, resellers, OEMs and managed analytic services providers all focused on helping customers implement SAS technology in ways that best fit their needs and those of their own customers. Digital transformation in core markets is driving significant growth in delivering SAS through cloud partners and managed service providers. SAS is doing more repeatable business with top global partners like Accenture, Capgemini and Deloitte. And as IoT becomes increasingly prevalent, SAS is enhancing collaboration with partners like Cisco and Intel to drive analytics adoption with IoT.